The Order No. 2005 rules, designed to promote competition, exploration,
development and production of Alaska natural gas, establish standards
for creating open seasons for potential shippers to compete for
and acquire initial capacity and future expansion capacity on
any potential Alaska pipeline. The rules also provide standards
for allocating the capacity to ensure nondiscriminatory access
to any Alaska transportation projects.

The State of Alaska, Enbridge Inc., Chevron/Texaco Natural Gas,
a division of Chevron U.S.A. Inc., and a joint filing by North
Slope Producers – ExxonMobil Corporation , BP Exploration
(Alaska) Inc. and ConocoPhillips – requested either clarification
or repeal of certain aspects of the open season rules, issued
February 9, 2005.

The Commission clarified that the Commission may require design
changes necessary to ensure that some portion of a proposed voluntary
expansion will be allocated to new shippers, or shippers seeking
to transport gas from areas other than the Prudhoe Bay or Point
Thomson areas, provided they agree to sign qualifying, long-term
transportation contracts.

Parties had maintained the rules erred by allowing Commission-mandated
design changes at the conclusion of the open season process and
that design changes would be an illegal extension of FERC authority.
But the Commission rejected those arguments, citing legal precedent
that any design change would not constitute a mandatory expansion
of any project and that the Natural Gas Act provides FERC authority
to attach to any certificate of public convenience and necessity
any conditions it deems necessary to meet the public interest.

Among other things, the Commission:

expanded criteria for evaluating late bids for capacity
and the requirement that any late bid contain a good-faith
showing. Parties had asserted the rule needed additional standards
to encourage participation in the initial open season and
to address late bidding for capacity;

clarified that the open-season plan must contain the actual open-season notice and eliminates the 30-day advance notice requirement that applicants must file open-season procedures to FERC. Parties had contended the original 90-day advance filing time frame could potentially result in unnecessary delays in FERC's processing of their request;

clarified that applicants must establish a separate entity to conduct the open season; and

clarified that open season notices need not include a cap on contract terms.

Revisions to Order No. 2005 will become effective on the date
the order is published in the Federal Register.